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TMI Blog2024 (10) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment policy is income or otherwise. Hon ble Supreme Court by referring to facts of the Sahney Steels Press Works [ 1997 (9) TMI 3 - SUPREME COURT] observed if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account and the basic test to be applied in judging the character of a subsidy, that test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. Taking into account the same, held if the object of the assistance under the subsidy scheme was to enable the assessee to set up new unit or to expand the existing unit, then the receipt of the subsidy was on capital account. By applying the same ratio as held in the case of CIT v. Ponni Sugars Chemicals Ltd. ors. (supra) to the facts of the present case, we note that the reward by way of MEIS scrips is given to offset infrastructure inefficiencies, but, not for the purpose of running the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 28(iiib) of the Act. We hold the sums received as a sale of MEIS scrips credited to the profit and loss account, the said treatment in the books of accounts by itself cannot be determinative of taxability of said receipt. Thus, the benefit derived by way of sale MEIS scrips in the open market is not an income with the meaning of provisions under section 2(24)(xviii) of the Act. Therefore, we find no infirmity in the order of the ld. CIT(A) for the reasons recorded therein and also for discussion made by us in the aforementioned paragraphs, the grounds raised by the Revenue fails and are dismissed. Nature of expenses - Disallowance of expenses on construction of building on leasehold land by treating the expenditure as revenue expenditure - HELD THAT:- We find, admittedly, no change in the facts and circumstances in the year under consideration to that of the AYs 2014-15 2015-16 [ 2023 (2) TMI 461 - ITAT CHENNAI] since issue is similar basing on same identical facts, we find no infirmity in the order passed by the ld. CIT(A) in allowing the claim of the assessee in treating the cost of construction as revenue expenditure. - Shri S.S. Viswanethra Ravi, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal computation. The said return was processed under section 143(1) of the Act. Thereafter, under scrutiny, notice under section 143(2) of the Act issued, the assessee furnished details as called for. Considering the said details, the Assessing Officer made additions on account of denying exemption under Market Linked Focus Products Scheme [MLFPS] licence, disallowance of amount spent on lease-hold land and disallowance on weighted deduction under section 35(2AB) of the Act, accordingly, the Assessing Officer determined the income of the assessee at ₹.36,61,77,500/- vide order dated 04.07.2019 passed under section 143(3) of the Act. 6. Aggrieved by the said order of the Assessing Officer, the assessee challenged the same before the ld. CIT(A). The ld. CIT(A) allowed exemption claimed on MLFPS and claim of amount spent on construction of building on lease-hold land vide order dated 10.10.2019. 7. As aggrieved by the same, the Revenue is in appeal before us by raising grounds concerning which are reproduced hereinabove. 8. The ld. CIT - DR, Shri S. Palanikumar, submits that the issue raised in ground No. (i) (ii) are concerning incentives by Government for exploring exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otor India Ltd. v. ACIT in ITA No. 3192/Chny/2017 for AY 2013-14 and vehemently argued that the said Coordinate Bench held the finding of the ITAT in the present assessee s own case for AY 2011-12 2012-13 in ITA No. 47 48/Chny/2016 is not applicable. 10. The ld. CIT-DR, by referring to Focus Market Scheme, submits that it is an export promotion scheme of the Government, designed to encourage exports to selected markets given certain disadvantage while export to this market. The scheme compensates or offset higher freight cost and other disadvantage to selected international market with a view to enhance the country s export competitiveness in these countries. He further submits that the said scheme was merged with MEIS as per 2015 Trade Policy. Further, he referred Focus Product Scheme [FPS] and submits that its main objective is to incentivize export of certain products, which have higher employment intensity and other advantages. He argued that as per FPS policy, exports of notified products to all countries shall be entitled for duty credit scrip equivalent to 2- 5% of the value of exports for each licensing year. The said policy also merged with MEIS as per Foreign Trade Policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of Explanation 10 to clause (1) of section 43 of the Act. He argued that the said amendment came into effect from 01.04.2016 and would accordingly apply to assessment year 2016-17 and subsequent assessment years. He vehemently argued that the present AY being 2017-18, the said amendment is applicable to the assessee. Further, he argued that since the MLFPS is an incentive directly falling under (xviii) of section 2(24) of the Act, is an income chargeable to tax. 12. The ld. DR referred to para 10 of the judgement of the Hon ble High Court of Bombay in the case of Serum Institute of India (P.) Ltd. v. Union of India [2023] 157 taxmann.com 107 (Bombay) and argued that the Serum Institute challenged the constitutional validity of impugned subclause (xviii) of section 2(24) of the Act in treating all concession given in general form for whatever purposes and objectives, as income. He drew our attention to para 43 of the said judgement and argued that the Hon ble High Court of Bombay held the amendment to section 2(24) by insertion of sub-cause (xviii) is a perfect example of a legislative endeavour to align the definition of income with the evolving economic land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Ponni Sugars Chemicals Ltd. Reported in 306 ITR 392 and also in the case of PCIT v. Nitin Spinners Ltd. (supra), held that the incentives provided to the industrial unit with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the State by accelerated industrial development, would be capital in nature. Further, he drew our attention to para 10 and argued that the Coordinate bench held the finding rendered by another Coordinate bench in the case of Hyundai Motor India Ltd. v. ACIT (supra) is not applicable to facts on hand as facts thereon are distinguishable. 14. The ld. AR, by referring to amendment to section 2(24) of the Act by way of insertion of sub-clause (xviii), argued that there was no cash component in the present case and even there is any assistance . He referred to Chapter 3 of Foreign Trade Policy-2015 and submits the objective of schemes under Export from India Scheme is to provide rewards to exporter to offset infrastructural inefficiencies and associated costs involved and to provide exporters a level playing field. The products and country are detailed in MFLPS. He referred to page 7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying the words by whatever name called as having to be read ejusdem generis with the term assistance, the same cannot mean that a reward is governed by section 2(24(xviii) of the Act as the term reward is completely different from the term assistance and by the principles of ejusdem generis cannot be understood as meaning that the term assistance can also include a reward. He strongly placed reliance in the case of Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. [2002] 4 SCC 219 at page 45 of the paper book and in the case of Grasim Industries Ltd. v. Collector of Customs [2002] 4 SCC 297 at page 54 of the paper book. Further, he referred to order dated 15.06.2023 passed by the Amritsar Bench of ITAT in the case of ACIT v. Gravita Metal Inc. in ITA No. 594/Asr/2019 dated 15.06.2023 and argued that the Tribunal held that exemption from excise duty do not fall in the definition of income as envisaged under section 2(24)(xviii) of the Act by holding so, a capital receipt not taxable under the provisions of the Income Tax Act. He referred to para 19 of the said order at page 80 of the paper book. 15. The ld. AR submits since in the absence of reward in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is any perversity or gross disparity resulting in clear or hostile discrimination. 42 As noted earlier it is trite that the legislature is the best forum to weigh different problems in the fiscal domain and form policies to address the same including to create a new liability, exempt an existing liability, create a deduction or subject an existing deduction to new regulatory measures. In the very nature of taxing statutes, legislature holds the power to frame laws to plug in specific leakages. The mere fact that the institution of tax by virtue of the impugned sub clause falls more heavily on petitioner cannot result in its invalidity. 43. In light of the above, in our view, the amendment to section 2(24) by the insertion of sub-cause (xviii) of the Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of income with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. The submissions of petitioner though appear to be of fiscal concern were, in our view, more an argument of diminished profits and a narrow interpretation of income which the Apex Court has time and again expanded. The submissions of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(24) of the Act, thus, we do not find force in the arguments of the ld. DR that the Hon ble High Court of Bombay was pleased to hold all incentives given in general form by the Government for whatever purpose or objective are to be treated, as income. 19. We find the orders of this Tribunal in assessee s own case for AYs 2011-12, 2012-13, 2013-14, 2016-17, 2014-15 and 2015-16 are at pages 112 to 147 of the assessee s paper book. The consolidated order for AY 2011-12 2012-13 at page 112 of the paper book, on perusal of the relevant part at page 118 in para 9, we note that a question arose for consideration before the Tribunal that when the assessee was given incentive for exploring the new markets across the globe, whether such incentive would be a capital receipt or revenue receipt? The Tribunal followed the decision of the Hon ble Supreme Court in the case of CIT v. Ponni Sugars Chemicals Ltd. 306 ITR 392, held the incentives provided by the Government of India for exploring the new markets across the globe and given to the assessee is not for running the business profitably but for expanding the market area, is a capital receipt, cannot be treated as income either under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthan in the case of PCIT v. Nitin Spinners Ltd. (supra). Therefore, we find force in the arguments of the ld. AR that the facts in the case of Hyundai Motors India Ltd. V. ACIT (supra) and in the case of PCIT v. Nitin Spinners Ltd. (supra) are relating to FMS only. Further, we note that as aggrieved by the decision of the Hon ble High Court of Rajasthan in the case of PCIT v. Nitin Spinners Ltd., the Revenue preferred SLP in Civil Diary No. S-179 of 2020 before the Hon ble Supreme Court, which in turn dismissed the said SLP vide its order dated 31,.08.2021, thereby, it clearly manifest the subsidy granted by Government of India to enhance Indian export potential in the international market, is a capital receipt, not chargeable to tax. 23. Further, we may not accept the arguments of the ld. DR that the order of this Tribunal in the case of Hyundai Motor India Ltd. V. ACIT (supra) is binding on us to hold as a revenue receipt in view of the order of another Coordinate Bench in assessee s own case for AY 2014-15 and 2015-16, which held as a capital receipt, which is admittedly latest to the order of the Hyundai Motor India Ltd. V. ACIT (supra). We find the order passed by Hyundai Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of the said provisions, we find the reasoning of the Assessing Officer in treating the sale of MLFPS as business income. In this regard, we shall examine as to whether the sale of scrips of MLFPS would fall under the provisions of section 2(24)(xviii) of the Act. We note that export from India, schemes are brought under Chapter 3 of Foreign Trade Policy between 01.04.2015 to 31.03.2020, which are placed on record at page 2 of the paper book by the ld. AR and reproduced relevant position herein below: Chapter 3 EXPORTS FROM INDIA SCHEMES 3.00 Objective The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved and to provide exporters a level playing field. 3.01 Exports from India Schemes There shall be following two schemes for exports of Merchandise and Services respectively: (i) Merchandise Exports from India Scheme (MEIS) (ii) Service Export from India Scheme (SEIS) 3.02 Nature of Rewards Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported/domestically procured against them shall be freely transferable. The Duty Credit Scrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy 2015 framed by the Government of India to exporters for level playing field. In view of the same, let us examine the arguments of the ld. DR as to whether the provisions under section 2(24)(xviii) of the Act are attracted to the facts of the present case or not, for better understanding, the provisions under section 2(24)(xviii) of the Act inserted by the Finance Act, 2015, w.e.f. 01.04.2016 is reproduced herein below for ready reference: (xviii) assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee [other than as substituted by the Finance Act, 2016, w.e.f. 01.04.2017 (a) the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43; or (b) the subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government, as the case may be.] 28. On plain rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Central Excise duties, chargeable on imported and excisable material respectively when used as inputs for goods to be exported. This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specific taxes. So duty drawback can either be in cash or in kind granted by the Board. Waiver or Concession falls under the category of discount on any amounts payable or paid. Therefore, we find the word and expressions by way of subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement made in sub-clause (xviii) of section 2(24) of the Acyt does not attract the facts of the present case. 30. We have to see as to whether the words by whatever name called will attract the assistance or the words subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement with reference to definition given above. In this regard, Shri Banusekar, ld. AR filed written note on principle of ejusdem generis and explained that where general words follow specific words then such general words take the colour from the specific words that precede and drew our attention the decisions of the Hon ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral term in a list based on specific accompanying terms, taking support from the decision of Hon ble Supreme Court in the case of Lokmat Newspaper Pvt. Ltd. v. Shankar Prasad (supra), Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. (supra) and Grasim Industries Ltd. v. Collector of Customs (supra), in our opinion, the words by whatever name called do not expand the scope of the word assistance , but, only expands the scope of the words subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement . We thus, hold that the word assistance is independent of the words by whatever name called and words by whatever name called are not qualifying the word assistance . By applying the same finding, let us see the difference between the words reward and assistance . As per the note given by the ld. AR, the term reward is defined as a thing given in recognition of service, efforts or achievement , whereas, the term assistance is defined as the provision of money, resources or information to help someone, thus, we find a reward is granted in a recognition of services, an assistance is given to someone as a help, but not in recogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assets concerned or from the written down value of block of assets to which concerned asset or assets belonged to. 6. Where the Government grant relates to a non-depreciable asset or assets of a person requiring fulfilment of certain obligations, the grant shall be recognised as income over the same period over which the cost of meeting such obligations is charged to income. 7. Where the Government grant is of such a nature that it cannot be directly relatable to the asset acquired, so much of the amount which hears to the total Government grant, the same proportion as such asset bears to all the assets in respect of or with reference to which the Government grant is so deducted from the actual cost of the asset or shall be reduced from the written down value of block of assets to which the asset or assets belonged to. 8. The Government grant that is receivable as compensation for expenses or losses incurred in a previous financial year or for the purpose of giving immediate financial support to the person with no further related costs, shall be recognised as income of the period in which it is receivable. 9. The Government grants other than covered by paragraph 5, 6, 7 and 8 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord by the appellant-revenue, therefore, we find force in the arguments of the ld. AR that the reward under the Foreign Trade Policy-2015 by way of MEIS scrips is given as a percentage of turnover cannot make the same as a revenue receipt, moreover, the manner of determining the benefit by itself cannot change the character of a capital receipt into a revenue receipt when the said benefit is not falling within the meaning under the provisions of section 2(24)(xviii) of the Act. In this regard, we refer to the decision of Hon ble Supreme Court in the case of CIT v. Ponni Sugars Chemicals Ltd. ors. (supra), which held that the purpose test is determination of whether a benefit under a Government policy is income or otherwise, the relevant portion of which is reproduced herein below for better understanding: 5. That matter concerns the 1980 Scheme. The dispute pertains to Assessment Year 1986-87. In this matter both the above questions arises for determination. The incentives conferred under that Scheme were twofold. First, in the nature of a higher free sale sugar quota and second, in allowing the manufacturer to collect excise duty on the sale price of the free sale sugar in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of this Court in the case of Sahney Steel and Press Works Ltd. and Ors. v. CIT reported in (1997) 228 ITR 253. 8. Shri Ganesh, learned senior counsel appearing on behalf of the assessee submitted that the benefits were conferred on the assessee under the 1980 and 1987 Schemes, namely, additional price by reason of enhancement of free sale sugar quota, which resulted in the benefit of additional price, which price had to be utilized only for repayment of loans taken by the assessee to establish a new unit or for expanding the existing unit. The said Schemes were not meant for a running unit. The second benefit, according to the learned counsel, lay in the rebate of excise duty under which the assessee was required to pay excise duty on the manufacture of additional quota of free sale sugar. According to the learned counsel, in judging the character of the incentive, the purpose test is applicable. In other words, according to the learned counsel, the character of the receipt in the hands of the assessee had to be determined with respect to the purpose for which the subsidy was given and that the point of time at which it is paid or its source or its form was irrelevant. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to supplement the trade receipts. (ii) The minimum investment specified was Rs. 4 crores for new units and Rs. 2 crores for expansion units. (iii) Increase in the free sale sugar quota depended upon increase in the production capacity. In other words, the extent of the increase of free sale sugar quota depended upon the increase in the production capacity. (iv) The benefit of the scheme had to be utilized only for repayment of term loans. 12. One important aspect may also be noted that in the case of Salem Cooperative Sugar Mills Ltd. we are concerned with Notification dated 15.11.1980. It indicates the above factors of the Scheme. The important point to be noted is that Government of India, financial institutions as well as the sugar industries are parties to the scheme in the sense that but for the scheme the financial institutions would not have given term loans to set up new units/expansion of the existing units. 13. The main controversy arises in these cases because of the reason that the incentives were given through the mechanism of price differential and the duty differential. According to the Department, price and costs are essential items that are basic to the profit ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate and independent words and which are not defined. He contended that therefore, the general meaning of these words are required to be considered, as per Black's Law Dictionary (Sixth Edition) wherein these two words are defined as under:- 'Exemption: Freedom from a general duty or service; immunity from a general burden, tax, or charge. Immunity from service of process or from certain legal obligations, as jury duty, military service, or the payment of taxes.' 'Subsidy: A grant of money made by government in aid of the promoters of any enterprise, work, or improvement in which the government desires to participate, or which is considered a proper subject for government aid, because such purpose is likely to be of benefit to the public' 17. From the above definitions, it is apparently clear that word exemption is used in the conditions when assessee is given freedom from following any rules or regulations whereas subsidy is something which is given to the assessee to meet the cost of its project. In the present case, assessee is exempted from making payment of excise duty to the extent of 36% of the total excise duty collected. It is not subsidy given to meet c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unjustified and bad in law. As such, the part addition confirmed by Ld. CIT(A) is directed to be deleted. Thus, the ground of the assessee is allowed. 40. On perusal of the above, we note that the Amritsar Bench of ITAT, by taking into account definition as per Black s Law Dictionary, held the words exemption and subsidy are two separate independent words in. Further, it held the word exemption from excise duty do not fall in the definition of income as envisaged under section 2(24)(xviii) of the Act, thereby, held a sum claimed as exempt is not an income, but a capital receipt not taxable under the provisions of the Act. In order to come to such conclusion, the Amritsar Bench of ITAT placed reliance in the case of Commissioner of Customs v. Dilip Kumar Co. AIR [2018] Supreme Court 3606, which laid down principle applicable for interpretation of taxing statute, that in interpreting taxing statute equitable consideration are entirely out of place, a taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted what is clearly expressed, it cannot employ anything which is not expressed, it cannot import provision to statute so as to sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Therefore, this Tribunal is of the considered opinion that the incentive given by the Government to the assessee for exploring the new market is a capital receipt, hence it _ cannot be treated as income either under Section 2(24) or 28 of the Act. In view of the above, we are unable to uphold the order of the lower authority. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted. 42. On perusal of the above, we note that the question arose for consideration is when the assessee was given incentive for exploring the new markets across the globe, whether such incentive be a capital receipt or revenue receipt. The Tribunal, considering decision of Hon ble Supreme Court in the case of Ponni Sugars Chemicals Ltd.(supra) held the incentive given by the Government of India for exploring new market across the globe, is not for running the business but for the expanding the market area, is a capital receipt and cannot be treated as income either under section 2(24) or 28 of the Act. As discussed above, the same finding has been followed by this Tribunal in assessee s own case for AY 2014-15 15-16, thereby, we summarise ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture in the computation of income as there was no ownership to the assessee on such leasehold land. The Assessing Officer disallowed the said expenditure by invoking Explanation 1 to section 32 of the Act by holding it is a capital expenditure by allowing depreciation. The ld. CIT(A), by following the orders of this Tribunal in assessee s own case, held the same as revenue expenditure and allowed the claim of the assessee. The latest consolidated order of this Tribunal in assessee s own case for AY 2014-15 2015-16 are at page 131 of the paper book. 46. The ld. DR did not agree with the finding of the Tribunal in assessee s own case for the said assessment year and challenged vehemently the order of the ld. CIT(A) following the same. He placed reliance on the decision of the Hon ble High Court of Madras in the case of CIT v. K.V. Nellaiappan [2022] 135 taxmann.com 223 (Madras). 47. The ld. AR relied on the decision of the Hon ble High Court of Madras in the case of TVS Lean Logistics Ltd. 293 ITR 432 (Mad). We note that the distinction between both the decisions of the Hon ble High Court of Madras are that in the case of CIT v. K.V. Nellaiappan (supra), the assessee therein taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises. In both the cases, the assessee has to lose the investment made for construction. Therefore, as rightly submitted by the Ld. representative for the assessee, the distinction made by the Assessing Officer between the case of the assessee and the cases before the Apex Court and the Madras High Court is not correct. This Tribunal is of the considered opinion that the facts of the case are identical to that of the Madras High Court and Apex Court. 6. We have carefully gone through the judgment of Apex Court in the case of Madras Auto Service (P) Ltd. (supra). The Apex Court at para 6 of its judgment observed as follows:- 6. The test for distinguishing between capital expenditure and revenue expenditure in our country was laid down by this court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34. In that case, the appellant-company had acquired from the Government of Assam lease of certain limestone quarries for a period of 20 years for the purpose of manufacture of cement. The lessee had, inter alia, agreed to pay an annual sum during the whole period of the lease as a protection fee and in consideration of that payment, the lessor undertook not to grant to any person any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding was never to belong to the assessee. Right from inception, the building was of the ownership of the lessor. Therefore, by spending this money, the assessee did not acquire any capital asset. The only advantage which the assessee derived by spending the money was that it got the lease of a new building at a low rent. From the business point of view, therefore, the assessee got the benefit of reduced rent. The High Court has, therefore, rightly considered this as obtaining a business advantage. The expenditure is, therefore, to be treated as revenue expenditure. 7. We have gone through the judgment of Madras High Court in TVS Lean Logistics Ltd. (supra). The Madras High Court after considering Explanation 1 to Section 32(1) of the Act and the judgments of Apex Court in Nasiruddin v. Sita Ram Agarwal (2003) 2 SCC 577 and Raghunath Rai Bareja v. Punjab National Bank (2007) 2 SCC 230, found that similar expenditure is revenue in nature. In fact, the Madras High Court has observed as follows:- 7. Similarly, there should be a literal rule of interpretation of a statute, which is the first and foremost principle of interpretation and where the words of a statute are absolutely clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia the same. Since similar facts exist during this year and Ld. CIT(A) has merely followed the earlier order of the Tribunal, we see no reason to take a different view in the matter. 16. The case law of Hon ble Apex Court in Mother Hospital Pvt. Ltd. vs. CIT [2017] 392 ITR 628 (SC) (as referred to by Ld. CIT-DR) is a case wherein a firm as owner of the land constructed hospital building. The firm leased the land to a tenant who reimbursed the cost of construction of building and claimed depreciation thereon. In this context, Hon ble Apex Court held that the tenant would not be eligible for depreciation as per Explanation 1 to section 32(1) on the expenditure incurred towards construction of building since only when the assessee holds a lease right or other right of occupancy and any capital expenditure is incurred by the assessee on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension of or improvement to the building and the expenditure on construction is incurred by the assessee, the assessee would be eligible to claim depreciation. The Hon'ble Supreme Court has denied the claim of depreciation for the reason that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 326/Chny/2024 AY 2018-19 (Revenue s appeal) 50. This appeal of the Revenue was filed with a delay of 59 days. Upon hearing both the parties, and on perusal of the affidavit, we find the reasons stated therein are bonafide, which really prevented the Appellant- Revenue in filing the appeal in time. Thus, the delay of 59 days is condoned. 51. We find ground No. 1 is general in nature and requires no adjudication. 52. We find ground Nos. 2 to 10 are similar to the ground Nos. 2 to 10 raised by the Revenue in ITA No. 3326/Chny/2019 for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) in allowing the claim of the assessee as revenue expenditure and the same view is equally applicable to the year under consideration. Thus, the ground Nos. 2 to 10 raised by the Revenue are dismissed. 53. We find ground Nos. 11 to 15 are similar to the ground Nos. 1(i) (ii) raised by the Revenue on same identical facts in ITA No. 3326/Chny/2019 for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the year under consideration. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal receipts, rejected the additional ground raised by the assessee. 65. Before us, the ld. AR submits that the Hon ble Supreme Court held in the case of Goetze (India) Ltd. (2006) 284 ITR 323 (SC), that the appellate authority has power to direct the Assessing Officer to consider even if any claim was not made in the original return of income. The ld. DR did not dispute the same. Thus, taking support from the decision of the Hon ble Supreme Court in the case of Goetze (India) Ltd. (supra), we deem it proper to remit the matter back to the file of the Assessing Officer with a direction to verify the above claim and allow the same in terms of our decision hereinabove to ground Nos. 1(i) (ii) raised by the Revenue in ITA No. 3326/Chny/2019 for AY 2017-18. Thus, ground No. 3 raised by the assessee is allowed for statistical purposes. 66. In the result, the appeal of the assessee is partly allowed for statistical purposes. ITA No. 94/Chny/2023 in the case of San Tex Inc v. ACIT for AY 2017- 18 [assessee s appeal] 67. Ground Nos. 1 2 are general in nature and requires no adjudication. 68. We find ground Nos. 3 to 5 and additional ground Nos. 6 7 raised by the assessee are similar to gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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